2016 FHA loan requirements

New FHA policy requires a minimum
credit of 500 to buy a home. In the old days FHA did not
require any credit score. These changes went in to effect in 2010. FHA minimum credit score is 500 to buy a house or refinance. Borrowers with a credit score above 500 are eligible for an FHA loan.

New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA 3.5% down payment. New borrowers with less than a 580 credit score will be required to put at least 10% down payment.

Borrowers with a score above 580 can refinance up to a 97.5% loan-to-value on a rate and term refinance. And up to 85% cash out refinance with a credit score above 580.

The FHA has taken the following step:

Update the combination of credit scores and down payments for new borrowers

New borrowers will now be required to have a minimum credit score of 580 to qualify for FHA's 3.5% down payment program

New borrowers with less than a 580 credit score will be required to put down at least 10%

2016 FHA loan requirements

First time home buyer 2016

No credit history

Three lines of credit are necessary to apply for an
FHA loan. However, in the event a borrower does not have sufficient
credit on their credit report the FHA will allow substitute forms. FHA
allows minimum trade lines if you have credit scores.

Late payments

During an underwriter analysis of borrower credit,
the overall pattern of credit behavior is being reviewed rather than
isolated cases of slow payments. If a good payment pattern has been
maintained, regardless of a specific period of financial difficulty
preceded it, the borrower may escape disqualification.

Collection accounts

FHA does not require collection accounts to be paid off as a
condition of mortgage approval. However, FHA does recognize that
collection efforts by the creditor for unpaid collections could affect
the borrower’s ability to repay the mortgage.

If evidence of a
payment arrangement is not available, the lender must calculate the
monthly payment using 5% of the outstanding balance of each collection,
and include the monthly payment in the borrower’s debt-to-income ratio.

Chapter 7 Bankruptcy

At least two years must have elapsed since the
discharge date of the borrower and / or spouse's Chapter 7 Bankruptcy,
according to FHA guidelines. This is not to be confused with the
bankruptcy
filing date. A full explanation will be required with the loan
application. In order to qualify for an FHA loan, the borrower must
qualify financially, have re-established good credit, and have a
stable job.

Debt to income

FHA loan requirements include a maximum debt to
income ratio. When a borrower applies for an FHA mortgage, they are
required to disclose all debts, open lines of credit, and all possible
approved sources of regular income. Using this data, the bank and the
FHA calculate the borrower's debt-to-income ratio.

FHA maximum
debt to income ratio is 54.99%. Most lenders will limit maximum
debt-to-income to under 50% and some lenders to 45%.

2016 FHA loan requirements

Mortgage World Home Loans of New Jersey is
an online mortgage company specializing in FHA loans for first time
home buyers. To buy a house with 3.5% down payment and a minimum
credit score of 580 using an FHA loan.

We look forward to working with you.

www.MORTGAGE-WORLD.com, LLC is not an agency of the state or federal government and is not affiliated with the Federal Housing Administration.
Nationwide Mortgage Licensing System ID 1630225
All loans arranged with third-party providers.
Licensed in the State of New Jersey
Florida License Number - MBR2317
www.MORTGAGE-WORLD.com, LLC
535 Bergen Blvd. Suite 2
Ridgefield NJ 07657
Call 888.958.5382